• Thursday, March 28, 2024
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FIRS denies contemplating 50% hike in VAT

FIRS denies contemplating 50% hike in VAT

The Federal Inland Revenue Service (FIRS) has denied media reports that the agency plans to hike the Value Added Tax (VAT) by 50 per cent in a bid to support the implementation of the recently approved minimum wage law.

In  a statement issued yesterday in Abuja, FIRS declared that “Tunde Fowler, the Executive Chairman, Federal Inland Revenue Service, (FIRS) on Tuesday called for an increase in the number of Nigerians and companies paying VAT and not a 50 per cent increase in VAT rate.’’

FIRS  said in the statement that although Fowler indicated that there should be an increase in VAT rate by the end of the year, “he NEVER, for once suggested a 50 per cent hike or any percentage increase at all.’’

‘’Rather, he promised improved collection in CIT, Petroleum Profits Tax, PPT and VAT in 2019 relative to the collection performance of the Service in 2018,’’ it said.

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FIRS in the report added that contrary to claims in the media, the Executive Chairman called for “a reduction in Companies Income Tax (CIT) rate for small businesses so as to improve compliance,’’ whilst providing transcripts from the interaction between Fowler and committee members of the Senate Finance Committee at the 2019-2021 Medium Term Expenditure Framework (MTEF) and Fiscal Strategy Paper ((PSP) interactive meeting on Tuesday.

The transcript quotes Senator Yusuf Abubakar Yusuf asking the FIRS Boss if the Companies Income Tax (CIT) rate which has been at 30 per cent over the years be increased or lowered.

Fowler is reported to have said his that “personal opinion is that the rate of CIT should remain at 30 per cent, to make sure that we do not reduce the tax rate, without getting others who are not in the tax net into the tax net.’’

The FIRS Boss furthered answered that for small businesses, there is an on-going discussion the Ministry of Finance for people who are having a certain turnover, while he expressed optimism on the possibility of reduction to 20 per cent to promote the small-scale businesses.

‘’But in terms of immediate reduction, I think we should try and stabilize to ensure a 90 per cent compliance of those in the tax net. I’m sure that at the end of the year, we can consider reducing our corporate income tax rate,’’ Fowler said.

In response to another question by Senator John Owan Enoh, the Chairman Senate Committee on Finance which bordered on FIRS ability to meet the new collection target and whether the VAT rate should be maintained, Fowler was shown to have said in the 6th paragraph that in terms of the of the N3 trillion target, it is very challenging.

‘’But I can certainly see an increase in VAT of at least 35 to 50 per cent this year, based on the enforcement activities. There will certainly be an increase in CIT (Companies Income Tax and also on PPT (Petroleum Profits Tax),’’ Fowler said in the transcript.

In 2018, FIRS collected the sum of N1.1 trillion in VAT N1,42 in Companies Income Tax (CIT) and N2.4 trillion in Petroleum Profits Tax (PPT).